City of Atlanta Financial Statement / Local government Audit Report Review Essay
A fund financial statement is the combination of identified records, which are used sustain and steer control over assets that have been kept aside for set goals, or exercises. The city, state, and other bordering governments, use store bookkeeping method to verify and show consistency of funds identified for valid necessities. The Financial Statements of City of Atlanta, Georgia County is examined for the purpose of this study. The City of Atlanta, Georgia county funds that are examined for the purpose of this study include; the proprietary fund, special revenue fund, and general fund.
The city of Atlanta keeps two different types of proprietary funds, which include Enterprise fund and internal service fund. Atlanta city utilises enterprise fund to account for business-type activities of the Building Permits Fund, parks, sanitation, underground Atlanta, recreation facilities, civic centre, Hartsfield-Jackson Atlanta International Airport, and Pecking Deck (Reed, 2012). An internal service fund is an accounting item used to allocate and accumulate costs internally among Atlanta City’s numerous functions. Atlanta City uses the internal service funds to account for the operation and maintenance of its vehicle fleet and the government group insurance fund for retirees and employees. The service of the internal service funds benefits both business-type and government functions, because of this, change in Net position and Net position are allocated between business-type activities and government activities in the government wide financial statements (Gauthier, 2009). Proprietary funds provide similar information as commercial-type activities in government-wide financial statements. Financial statements of the proprietary fund provide separate information for the Department of watershed management, and the Department of Aviation, which are considered to be key funds for the city. Conversely, the internal service fund and Enterprise fund are aggregated into a single financial statement, which is presented in the Proprietary financial statements (Reed, 2012). The Financial statements of Proprietary fund follow the government fund financial statements. The City uses Store Bookkeeping method to verify and show consistency of funds in the financial statements. Special revenue fund is used to account for particular revenues and are legally limited to expenditures of specific purposes. General Fund are those funds that are committed for day to day activities of the government. The accounting practices used for general funds and specific revenue fund are similar to those used in proprietary funds.
The objective of Government Accounting Standards Board (GASB) No. 54 is to facilitate useful use of information provided in the fund balance. GASB Statement No. 54 provides clear fund balance classification, which can be applied by clarifying current government fund type definitions (Change, 2011). GASB No. 54 statement establishes fund balance classifications, which include a hierarchy based chiefly on the extent to which government is restricted to observe limitations levied upon usage of resources stated in the financial statements. The proprietary fund, which includes the internal service and enterprise funds are classified as restricted funds because they can only be spent of particular purposes, which are stipulated by Atlanta City’s constitution, enabling legislation and external resource providers (Vermeer, Patton, & Styles, 2011). The funds in internal service and enterprise funds are restricted to be spent on activities determined by formal action of Atlanta’s City’s government highest decision making authority. Special revenue fund is a committed fund because it is limited to expenditures of specific purposes. The resources in the general fund are restricted to provide resources that are required for the daily activities; therefore pay all operational and administrative expenses. The general fund is financed by restricted revenues and general purpose revenues (Reed, 2012). The general purpose revenues are those revenues generated from general activities, and restricted revenues are generated from specific purposes outlined in statutes, agreements, contracts, reserved for particular purposes and constitution.
The GASB Statement No. 34 provides new financial reporting requirements for the Atlanta City government. This statement requires local and state governments to retain some information in the current financial statement, but also go beyond the accustomed practices to incorporate different and new information (Vermeer, Patton, & Styles, 2011). Atlanta city’s financial statement provides information about funds. GASB Statement No. 34 requires the local government to continue providing information about funds, but to provide information about major, or most important funds, which includes the general fund. Under this statement, financial managers who are knowledgeable about the events, transactions, and conditions indicated in the financial statement and fiscal policies, which manage its operations are required to provide their opinion about financial information in the financial statements in a readable and clear manner (Gauthier, 2009). The Atlanta city’s financial statement is complaint with GASB Statement No. 34, by providing information about general fund, enterprise and internal service fund in a manner that is easy and clear to understand. The financial statement provide information about the balances in the general fund, and also important information about financial transactions for the year (Reed, 2012). The financial manager’s management’s discussion and analysis (MD&A) provided clearer information about Atlanta’s City’s financial performance, enterprise and internal service fund performance and balances, and what they mean.
The comparative analysis of the financial statements of Atlanta City’s quarterly performance for the year, and those of previous years demonstrated clarity of the financial statement (Vermeer, Patton, & Styles, 2011). The financial manager indicated the comparative performance analysis of the City’s expenditures, revenues, assets, and other material items (Reed, 2012). The comparative analysis provides users of financial statements with the flow of funds throughout the year. The financial manager should be able to include other material aspects such as the risk analysis of the financial position (Reed, 2012). The inclusion of information about Atlanta government exposure to financial risk and economic risk is imperative in providing users with information about susceptibility of the government to internal and external shocks. The revenue for Atlanta City for the year 2012, totalled $2.0 Billion, this represents a decrease by $14.3 million or 0.7% when compared to 2011 performance (Reed, 2012). This can be attributed to the increase in expenses during the year, coupled by a reduction in taxes collected during the year.
Atlanta City financial statement is complaint with the provisions of GASB. The financial statement is complaint with provisions of GASB statement No. 54 and No. 34 that provide report guidelines for government funds. The City’s financial performance in 2012 decreased when compared to 2011.
Change, B. A. (2011). Provisions of Governmental Accounting Standards Board (GASB) Statement No. 54. Fund Balance Reporting and Governmental Fund Type Definitions.
Gauthier, S. J. (2009). What everyone needs to know about the new fund balance. Washington D.C: Government Finance Officers Association.
Reed, K. (2012). Audited Comprehensive Finacial Report for the year ended June, 2012. Atlanta: City of Atlanta.
Vermeer, T. E., Patton, T. K., & Styles, A. K. (2011). Reporting of general infrastructure assets under GASB Statement No. 34. Accounting Horizons, 25(2), 381-407.